Protecting Your Beloved Possessions

3 Decisions That Might Be Raising Your Insurance Premiums

Everyone wants cheaper car insurance, but the insurance companies don't offer this essential service for free. While everyone knows that insurers use complex (and highly computerized) sets of actuarial tables to determine risk, few people understand what goes into them. Your driving history and other factors can impact your premiums, but they aren't all that's driving up your rates.

If you think that your premiums are entirely out of your control, then think again. These three decisions may be adding to your rates and driving up your monthly premiums.

1. You're Paying Monthly

Believe it or not, car insurance isn't a month-to-month service. Insurers view your policy as a single block spanning an entire year. When you pay every month or six months, you're enrolling in a payment plan. However, like many other installment plans, there's usually a cost associated with breaking up what you pay. You're paying less now, but you're paying more altogether.

If you can afford to pay your entire yearly premium, it's worth contacting your insurer and inquiring about the price difference. You may discover that you can earn a substantial discount by paying in one lump sum.

2. You're Not Shopping Around

Your policy might auto-renew every year, but your insurer isn't necessarily updating your terms to give you the best rates possible. Your provider may update your policy if you get a new car or make a significant change to your coverage, but that's usually it. Meanwhile, improvements in your credit score or even changes in employment might net a discount on your rates if you take a proactive approach.

It's unnecessary to check for insurance quotes every few months, but consider shopping around every year or two. This process can score you some hefty discounts if your circumstances change drastically, such as getting married or moving to a new city.

3. You're Letting Bills Lapse

Allowing your insurance payments to lapse will not have a positive effect on your premium, but that's not the only financial misstep that can cost you dearly. Missing payments on other bills that result in a reduced credit score can also increase your insurance rates. For many insurance companies, your credit score will be near the top of the list when it comes to factors affecting your premium.

Although financial hardship means that sometimes missing a bill or two is inevitable, keeping your credit score intact is one of the best decisions you can make to ensure that your insurance premiums remain as low as possible.

Contact your car insurance company for more information.